Gold (XAU/USD) Price Forecast: Rally Accelerates as Bull Trend Extends

Gold Breaks Key Resistance as Momentum Accelerates

Gold’s advance has accelerated the past couple of days, evidenced by the wider range days that continue to end near the highs of the range. On Wednesday, gold busted right through two potential resistance levels, at $5,182 and $5,300, after stalling near the lower level on Tuesday. The first target was the completion of a measured move and the second a 127.2% projected target for a rising ABCD pattern.

A daily close above $5,300 will confirm the breakout of the range and a continuation of the bull trend with a new record closing high. Today is the eighth day of higher daily lows and highs. Today’s low of $5,157 is short-term support, as a drop below it will change the pattern of higher daily highs and lows.

Extended Rally Raises Risk of Near-Term Pullback

Until there is a first sign of weakness, the bull trend can be expected to continue. However, the advance continues to get more extended and at risk of a sharp pullback. This can be seen by the Relative Strength Index and the distance of the price of gold from the 10-day average, which is now at $4.897. Also, the extension of a measured move following the breakout of a $5,182 target further confirms an extension of price.

Higher Fibonacci Targets Come into Focus

With the $5,300 level exceeded, gold heads towards a 314.1% extension of the October pullback, at $5,440, followed by a 341.4% extended target of the same measure at $5,576. Momentum is accelerating as the trend has entered a more speculative phase. This means the upper targets may yet be reached before a correction. Above $5,576 is a 161.8% projected Fibonacci target for the rising ABCD pattern noted above.

Downside Levels to Watch if Momentum Fades

On the downside, a drop through today’s low has gold heading towards an eventual test of support near the 10-day average, at $4,898 currently. The first approach is likely to see a bounce. If not, and the 10-day fails as support, the 20-day average becomes a target at $4,691. The 20-day average was confirmed as support from November onward, and it should show support again, at least on the first touch.

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